The Universal Tuition Tax Credit is based on the simple principle that Michigan
citizens and businesses should make education a priority, and that those citizens and
businesses that are already making education a priority should not be penalized or taxed
unfairly. This occurs today when parents and others are forced to pay twice when they
support nonpublic schools and when they pay additional tuition to send their child to a
public school outside their home school district without a release of funds. The UTTC
establishes basic fairness by allowing parents and others who choose an alternative
schoolpublic or privateto do so without being penalized. The UTTC will expand
the effective options for parents and students so they may choose an educational
opportunity that best meets their needs. As described here, the UTTC will benefit both
public and nonpublic schools.

Unlike a traditional tuition tax credit that may be used only by parents to offset only
their personal income tax, the UTTC is "universal" in character. It may be used
by any Michigan elementary or secondary school student. It may be used for tuition paid to
a public or private school. It is applicable against three separate state taxes and may be
applied universally by any state taxpayerindividual or corporationthat pays
tuition for a Michigan student to attend an alternative Michigan elementary or secondary
school. The credit may be applied to the state individual income tax,64 the
Single Business Tax,65 or the State Education Tax.66 It is important
to recognize that the UTTC is a tax credit, not a tax deduction. This means
that it can be subtracted directly from the taxpayers tax liability, not simply used
to reduce the basis of the tax. Therefore, if a taxpayer has a pre-credit tax liability of
$3,000 and a tuition tax credit of $2,000, the taxpayer would pay tax of only $1,000.

The UTTC plan can be accomplished using the existing tax system and, with slight
modifications, the existing mechanisms for tax payment, refunds for overpayment,
enforcement mechanisms, and credits. Significantly, the Michigan Individual Income tax
already allows tuition tax credits for tuition paid to certain colleges and universities.
The UTTC modifies and extends this tax credit to elementary and secondary schools. The
income tax already allows credits for property taxes (the "Homestead" or
"circuit breaker") and home heating costs. The property tax credit alone
accounted for $435 million in tax credits in 1993. Other credits are allowed for artwork,
certain community foundations and homeless shelter donations, contributions to colleges
and universities, and medical savings accounts.67 Similarly, the Single
Business Tax provides for a variety of deductions and credits.

Unlike a traditional tuition tax credit, the UTTC is "universal." It may be used by any Michigan elementary or secondary school student for public or private school tuition. It may be applied universally by any state taxpayer-individual or corporation-that pays tuition for a Michigan student.